An automobile repair shop charges the competitive market price of $16 per bike repaired. The firm's short-run total cost is given by STC(Q) = Q³/3. Son 3. Draw the shop's total revenue and total cost curves, and graph the total profit on the same diagram. Using your graph, label the point of profit-maximizing quantity and its profit level. 4. Suppose now the new price is P'. What is the profit-maximizing quantity as a function of P'. If the price increases by a factor of four (i.e. price: 4P'), how much does the profit-maximizing quantity increase?

An automobile repair shop charges the competitive market price of $16 per bike repaired. The firm's short-run total cost is given by STC(Q) = Q³/3. Son 3. Draw the shop's total revenue and total cost curves, and graph the total profit on the same diagram. Using your graph, label the point of profit-maximizing quantity and its profit level. 4. Suppose now the new price is P'. What is the profit-maximizing quantity as a function of P'. If the price increases by a factor of four (i.e. price: 4P'), how much does the profit-maximizing quantity increase?

Economics:

10th Edition

ISBN:9781285859460

Author:BOYES, William

Publisher:BOYES, William

Chapter23: Profit Maximization

Section: Chapter Questions

Problem 11E

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